An American market blogger found himself on the receiving end of a 8,000 euro fine for quoting another blogger. In real money, that works out to an almost $11,000 fine. And all for quoting another blogger's best guess on a French bank's leverage ratio.

Mike "Mish" Shedlock is a US blogger who covers global markets and his story begins this way.

Société Générale took exception to the numbers and came up with its own set of numbers. According to SG, its leverage was 9.3%.

Chevallier revamped his math after SG's initial noisemaking and Shedlock issued an addendum to his own post.

Société Générale disputes the numbers and new calculations using the banks' numbers are 28:1 or perhaps 23:1 not 50:1 as noted on Forex Crunch.

My position has not changed much. Something is seriously wrong at Société Générale. Banks do not plunge out of the blue on rumors. I do not know the precise leverage, but shares are acting as if Société Générale has severe capital constraints (which of course they will deny) and/or other major problems.

That only seemed to irritate SG more. It contacted the SEC and basically informed the American regulatory body that whatever numbers it's presented were to be taken as fact. The SEC passed this complaint on to Shedlock, adding (paraphrased by Shedlock) "French banks [are] notorious about filing frivolous complaints."

Shedlock received a few more letters (in French) which urged him to respond to the complaints (but only in French), which he duly ignored. Later, a French blogger compiling his own post on the issue (entitled: Gross Delirium: The AMF sanctions bloggers rather than financial corporations!) contacted Shedlock and offered his assistance. One of Shedlock's friends broke down the French bank's complaints into plain English.

The French authorities accuse Chevallier of 'knowingly disseminating false information' about SocGen and you to have disseminated it further on 'Chevallier's urging', although you should have known better and it was your duty to check if his numbers were right (that is the basis for fining him 10,000 and you 8,000 euros).

None of this mattered to the French bank, which accused the bloggers' calculations of possibly "influencing" its share price. While the SEC may have passed on the complaint with an eyeroll, the AMF, which regulates the French stock market, took the accusations at face value and issued fines to both bloggers. Not that the AMF is going to have much luck collecting these fines. Chevallier is appealing the verdict and suing AFP (France's largest newspaper) for making "false and defamatory accusations." Shedlock, conversely, is doing nothing.

The Witch hunt is now over and I was fined nearly as much as Chevallier. It's absurd enough to fine someone for a quote, and even more so when the facts are accurate.

The AFM has no jurisdiction over me, so they won't collect. As a US citizen living in the US, I am not subject to the absurdities of French laws, or French witch hunts. All they get from me is a vow to never go to France.

Good idea, considering French law apparently provides regulatory bodies with the power to fine bloggers for publishing their opinions on French banks, even when these opinions are backed up by reasonable calculations. And Shedlock is almost certainly protected under the SPEECH Act, which protects Americans against foreign judgments that would violate the First Amendment here. There doesn't seem to be much "regulation" going on in this situation. (And any French legislation that touches on the internet is routinely terrible.) Conceivably, SG could leverage itself Lehman-style and financially beat into submission anyone who points out this fact by running and complaining to the nearest subservient "authority."

Translation needed:

How do you say 'Streisand effect, might want to look that up' in french?

Seriously though, a bank is apparently having financial difficulties, two otherwise minor bloggers point it out, and rather than just let it go and have the blog posts fade away, they sue them, bringing even more attention to their financial difficulties... just brilliant, though given they actually got the authorities to fine both bloggers significantly for posting facts and opinions, maybe they thought the (apparently) significant clout they had would be enough to silence both?

Re:

Don't forget the EU

I don't know if it would apply in this case but it is something he should check. The EU has a European arrest warrant, so if this somehow became criminal then he'd have to be careful about going to any EU country.

Re: Don't forget the EU

Unless they slap terrorist on the folder, I doubt it is something interpol would bother touching. Of course terrorist in the UK context would probably cover it, so there may be some cause for concern at least there...

Re: Don't forget the EU

Re: Re: Don't forget the EU

No.

The US and the EU countries do have an extradition treaty, so if the blogger is facing a charge that could land him in hail for a year or more (in both countries), then a US arrest warrant could be issued and he could be extradited.

watch out Mike

SG now can fine you for two quotes... let see that is 2x... I wonder if French math is the same as American math... maybe we should call in the RIAA and MPAA to work out the math... the are good at random numbers.

Re:

The French were also, at one point in time, the oppressive, dominant military force on the planet. That's just as relevant to French character today as misguided WWII references are. Which is to say, not at all.

Re:

Sorry, what?

The French actually declared war on Hitler in September 1939 along with Great Britain precisely to live up to its treaty commitments, and because it was the 'right' thing to do. This is the nation that had had a substantial part of WW1 fought on its territory and had fought the Germans for four times as long as the US did during that conflict.

Ok, so they overestimated their defences and didn't understand mobile tank warfare (no-one really did outside the German High Command), but they continued to fight the Germans as best they could after their invasion in mid-1940. A full year and a half before the Americans bothered their asses to join a war they'd only joined because the Japanese and Germans declared war on them!

This is the same fighting French who gave us the words 'Maquis' and 'The Resistance'.

Coming from a country that cries when its furthest extremities are hit (i.e. Hawaii), and doesn't have to guard its national borders against anything more than Mexicans, Canucks and Siberians, you sure can be quick to dish out abuse to countries with long, actually difficult-to-defend borders.